EXECUTION VERSION
TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS
AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN
THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART DESIGNATED AS THE ORIGINAL ON
THE SIGNATURE PAGE OF THIS AGREEMENT BY AFS INVESTMENTS XVI LLC
AIRCRAFT LEASE AGREEMENT
Dated as of May 1, 2002
between
AFS INVESTMENTS XVI LLC
as Lessor
and
FRONTIER AIRLINES, INC.
as Lessee
in respect of
One Airbus A319 Aircraft
as further identified herein
---------------------------------
incorporating the provisions of a
COMMON TERMS AGREEMENT
---------------------------------
AIRCRAFT LEASE AGREEMENT
THIS AIRCRAFT LEASE AGREEMENT is made as of May 1, 2002 and is
BETWEEN:
(1) AFS Investments XVI LLC, a limited liability company formed under the laws of Delaware and an
indirect wholly-owned subsidiary of General Electric Capital Corporation, a Delaware corporation
("GECC"), having its principal place of business at c/o GE Capital Aviation Services, Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessor"); and
(2) FRONTIER AIRLINES, INC., a corporation incorporated under the laws of Colorado with its principal
place of business and chief executive office at Frontier Center One, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Lessee").
WHEREAS:
(A) Lessee wishes to lease the Aircraft (as defined below) from Lessor, and Lessor wishes to lease the
Aircraft to Lessee, on the terms and subject to the conditions provided herein;
(B) GECC and Lessee have entered into the Common Terms Agreement (as defined below) in respect of
aircraft that may be leased from time to time by Lessee or one of its Affiliates from Lessor or one
of its Affiliates; and
(C) Lessor and Lessee wish to incorporate by reference such Common Terms Agreement, as well as Schedules
A and B attached hereto, into this Aircraft Lease Agreement for the Aircraft;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. INTERPRETATION
1.1 Definitions: In this Aircraft Lease Agreement, the following capitalized words and expressions have
the respective meanings set forth below:
Agreed Lessee Modifications means any modifications or changes to the GECC A319 Baseline
Specification as requested by Lessee and agreed by Lessor for incorporation on the Aircraft prior to
Delivery. Lessor agreement to such modifications shall not be unreasonably withheld. All requests
for any Agreed Lessee Modification shall be made no later than ten (10) months prior to the Delivery
of the Aircraft.
Aircraft means the Airframe, Engines, Parts and Aircraft Documents and Records relating to the
Aircraft described on Schedule A hereto.
Airframe Maintenance Adjustment shall have the meaning as set forth in Schedule B, Part VI hereof.
Airframe 4C Check means the 4C check including 5 year structural inspections all in accordance with
Lessee's Maintenance Program which, at a minimum, shall comply with the Manufacturer's Maintenance
Planning Document and Manufacturer's Maintenance Review Board Report.
Airframe 8C Check means the 8C check including 10 year structural inspections all in accordance with
Lessee's Maintenance Program which, at a minimum, shall comply with the Manufacturer's Maintenance
Planning Document and Manufacturer's Maintenance Review Board Report.
Airframe Structural Check means a heavy maintenance visit which shall include but not be limited to
accomplishment of either or both of an Airframe 4C Check and an Airframe 8C Check.
Airframe 4C Supplemental Rent and Airframe 4C Supplemental Rent Rate shall have the respective
meanings set forth in Clause (a) of Schedule B, Part V hereof.
Airframe 8C Supplemental Rent and Airframe 8C Supplemental Rent Rate shall have the respective
meanings set forth in Clause (a) of Schedule B, Part V hereof.
Alternate Scheduled Delivery Month means one Aircraft in each of April, 2002, November, 2002,
December, 2002, June, 2003, May, 2003, September, 2003, April, 2004, and May 2004 as alternative
delivery months to a Scheduled Delivery Month; subject, however to the continued availability of any
Aircraft in any month other than an originally Scheduled Delivery Month.
APU Supplemental Rent and APU Supplemental Rent Rate shall have the respective meanings set forth in
Clause (d) of Schedule B, Part V hereof.
Common Terms Agreement means the "Aircraft Lease Common Terms Agreement" dated as of April 20, 2000
executed by GECC and Lessee (as in effect on the date hereof without, unless Lessor and Lessee
otherwise expressly agree, giving any effect to any subsequent amendment, supplement, waiver or
other modification thereto), and which forms part of this Aircraft Lease Agreement.
Delivery Condition Requirements means the requirements specified in Part III of Schedule A.
Delivery Location means Hamburg, Germany or such other location as Lessor and Lessee mutually agree.
Deposit means all amounts payable pursuant to Section 3.1 hereof.
Discount Rate means ten percent (10%).
Engine LLP Supplemental Rent and Engine LLP Supplemental Rent Rate shall have the respective
meanings set forth in Clause (b) of Schedule B, Part V hereof.
Engine Refurbishment Maintenance Adjustment shall have the meaning as set forth in Schedule B, Part
VI hereof.
Engine Refurbishment Supplemental Rent and Engine Refurbishment Supplemental Rent Rate shall have
the respective meanings set forth in Clause (c) of Schedule B, Part V hereof.
Final Delivery Date means the date that is six (6) months after the last day of the Scheduled
Delivery Month for the Aircraft.
Financing Documents means any documentation reflecting a mortgage or other debt financing for the
Aircraft as the same may be restated, refinanced, replaced or refunded, from time to time as
notified by Lessor to Lessee.
Financing Parties means the holders of any indebtedness relating to the Aircraft.
Financing Parties' Representative means any lender under the Financing Documents, if any, and its
successors or assigns.
Guarantor means any guarantor, if any, of the Lessee's obligations hereunder.
Indemnitee means each of Lessor, Owner, GECC, Aviation Financial Services Inc., AFS Investments XVI
Inc., GECAS, the Financing Parties' Representative and the Financing Parties, and their successors
and assigns, and each of their shareholders, members, contractors, directors, officers,
representatives, agents and employees.
Landing Gear Supplemental Rent and Landing Gear Supplemental Rent Rate shall have the respective
meanings set forth in Clause (e) of Schedule B, Part V hereof.
Maintenance Adjustment means collectively the Airframe Maintenance Adjustment, the Engine
Refurbishment Maintenance Adjustment, the Engine LLP Maintenance Adjustment, the APU Maintenance
Adjustment and the Landing Gear Maintenance Adjustment payable by Lessee pursuant to Section 5.4 of
the Common Terms Agreement, Section 3 of this Agreement and Schedule B, Part VI of this Agreement.
Manufacturer means the manufacturer of each of the Airframe or an Engine, as the case may be, as set
forth on Schedule A hereto.
Owner means Lessor or such other entity as notified by Lessor to Lessee in writing in accordance
with the terms of the Lease, including Section 14 of the Common Terms Agreement.
Redelivery Location means Denver, Colorado, or such other location on Lessee's route system within
the Continental United States as Lessor shall advise Lessee in writing at least 30 days prior to the
Expiry Date; provided that, if an Event of Default has occurred and is continuing, such notice may
be delivered on the Expiry Date.
Rent means all amounts payable pursuant to Section 3.2 hereof for the Aircraft.
Rent Commencement Date means the date on which Lessor tenders the Aircraft for Delivery to Lessee in
accordance with Clause 4.3(a) of the Common Terms Agreement.
Scheduled Delivery Date means the date notified by Lessor to Lessee in accordance with Clause 4.1(a)
of the Common Terms Agreement for the delivery of the Aircraft in the Scheduled Delivery Month.
Scheduled Delivery Month means June, 2002.
Scheduled Expiry Date means the date immediately preceding the date corresponding to the Delivery
Date in the month that is the one hundred forty-fourth (144th) month after the Delivery Date for the
Aircraft, which date shall be specifically set forth in the Lease Supplement for the Aircraft.
State of Registry means United States.
Supplemental Rent means, as applicable, all amounts payable under the Lease in respect of each of
Airframe Supplemental Rent, Engine Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent.
Supplemental Rental Cap shall have the meaning set forth in Schedule B, Part V hereof.
Tax Indemnitee means each of Owner, Lessor, Financing Parties' Representative, and each member of
the consolidated group of which Lessor or Owner is a member for United States Federal Income Tax
purposes, and their successors and assigns. For purposes of the foregoing sentence, where the Owner
or Lessor is a pass-through entity for Federal income tax purposes, Tax Indemnitee shall include the
consolidated group in which the taxable income or loss of the Owner or Lessor is reported for
Federal income tax purposes.
1.2 Interpretation: Unless otherwise defined herein, words and expressions defined in the Common Terms
Agreement have the same respective meanings for the purposes of this Aircraft Lease Agreement. The
construction provisions of Section 1.2 of the Common Terms Agreement shall apply to this Aircraft
Lease Agreement.
2. LEASING
2.1 Agreement to Lease: Subject to the terms and conditions of the Lease, Lessor will lease the
Aircraft to Lessee and Lessee will take delivery of and lease the Aircraft from Lessor in accordance
with the Lease for the duration of the Term for the Aircraft.
2.2 Term: Subject to Sections 4.1 through 4.4 of the Common Terms Agreement, Delivery of the Aircraft
will occur at the Delivery Location, whereupon Lessee shall accept the Aircraft hereunder by
executing and delivering a Lease Supplement substantially in the form of Lease Supplement No. 1 as
provided in Section 4.3 of the Common Terms Agreement. The Term for the Aircraft will commence on
the Delivery Date, which Delivery Date is scheduled to occur on the Scheduled Delivery Date, and
will expire on the Scheduled Expiry Date unless terminated earlier in accordance with the provisions
of the Lease.
3. PAYMENTS
3.1 Deposit and Letter of Credit: Lessee shall pay to Lessor the Deposit in cash or by Letter of Credit
(to which Deposit Sections 5.12 and 5.13, as applicable, of the Common Terms Agreement shall apply)
in the amount and at the times provided in Schedule B hereto.
3.2 Rent: Lessee shall pay Rent for the Aircraft to Lessor on each Rent Date during the Term in the
amount determined in accordance with Schedule B hereto and as provided in Sections 5.2 and 5.3 of
the Common Terms Agreement. The first instalment of Rent shall be due and payable on the Rent
Commencement Date for the Aircraft as defined herein. Provided no Event of Default has occurred and
is continuing, (i) during the first five Rental Periods, Lessor shall grant Lessee a credit in an
amount equal to the Initial Aircraft Rental Credit. The Initial Aircraft Rental Credit shall be
applied against the Rent for the Aircraft then due and payable for the applicable Rental Periods as
set forth above following the Aircraft Delivery Date or in such other manner as Lessor and Lessee
may agree.
3.3 Supplemental Rent and Maintenance Adjustment: Lessee shall pay (a) Supplemental Rent for the
Aircraft to Lessor on each applicable date during the Term in accordance with Section 5.4 of the
Common Terms Agreement and in the amounts provided in Schedule B hereto; and (b) the Maintenance
Adjustments for the Aircraft to Lessor on the Return Occasion in the amounts provided in Schedule B
hereto and as provided in Section 5.4 of the Common Terms Agreement. Lessor shall retain all
Supplemental Rent and Maintenance Adjustments, subject to Section 3.4 below. Lessee's obligation to
pay Supplemental Rent for the Aircraft shall be suspended when the Supplemental Rental Cap has been
reached. The Supplemental Rental Cap for the Aircraft shall be maintained during the Term and
increased from time to time by an amount equal to any Lessor Maintenance Contribution made by Lessor
with respect to the Aircraft, whereupon Lessee shall recommence payment of Supplemental Rent until
the Supplemental Rental Cap for the Aircraft shall again have been reached.
3.4 Lessor's Maintenance Contribution: Lessor shall make Maintenance Contribution payments as and to the
extent provided in Section 7.2 of the Common Terms Agreement.
3.5 Lessor's Bank Account: For the purposes of Section 5.5 of the Common Terms Agreement, Lessor's bank
account and wire transfer particulars, to which all payments to Lessor shall be made, are at the
date hereof, Bankers Trust Company, ABA number 021 001 033 for the account of GE Capital Aviation
Services, Inc., as Manager, Account No. 50 234 585, Ref. MSN 1759.
4. CONDITION OF THE AIRCRAFT AT DELIVERY
4.1 On the Delivery Date, as a condition to Lessee's obligation to accept delivery thereof, the Aircraft
shall be in the condition provided in Part III of Schedule A hereto.
5. CONDITION OF THE AIRCRAFT AT REDELIVERY
5.1 On the Return Occasion for the Aircraft, Lessee shall redeliver the Aircraft to Lessor at the
Redelivery Location and at such redelivery the Aircraft shall be in the condition provided in Part
IV of Schedule A hereto and in the Common Terms Agreement, including Schedule 6 of the Common Terms
Agreement.
6. ADDRESSES FOR NOTICES
The addresses and facsimile and telephone numbers of Lessor and Lessee are as follows:
Lessor: AFS Investments XVI LLC
c/o GE Capital Aviation Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Contracts Leader
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Lessee: Frontier Airlines, Inc.
Address: Frontier Center One
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
7. THE SCHEDULES AND COMMON TERMS AGREEMENT
All the provisions of Schedule A, Schedule B and the Common Terms Agreement are incorporated by
reference herein and are part of this Aircraft Lease Agreement as if they were set out in full
herein. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BY ITS SIGNAUTE BELOW, THE LESSEE
ACKNOWLEDGES AND AGREES THAT THE LEASE OF THE AIRCRAFT HEREUNDER IS ON AN "AS IS, WHERE IS"
BASIS AND THAT THE DISCLAIMERS, EXCUPLATIONS AND LIMITATIONS OF LIABILITY, INDEMNITIES, THE
CHOICE OF NEW YORK, AND THE WAIVER OF ANY RIGHT TO A TRIAL BY JURY PROVIDED FOR IN THE COMMON
TERMS AGREEMENT ARE INCORPORATED HEREIN BY SUCH REFERNCE AND ARE PART OF THIS AGREEMENT AS IF
THE SAME WERE SET OUT IN FULL HEREIN.
8. RIGHTS AND REMEDIES. The exercise by Lessor of its rights and remedies pursuant to Section 13.2 of
the Common Terms Agreement is subject to Part VII of Schedule B of the Lease.
9. No amendment except in writing
No provision of this Lease, including any provision of Schedule A, Schedule B or the Common Terms
Agreement, may be amended, rescinded, changed, waived, discharged, terminated or otherwise modified
in any way whatsoever, except by a writing signed by the party to be charged. Lessor and Lessee
acknowledge their agreement to the provisions of this Section 9 by their initials below:
Lessor: ____________________ Lessee: ____________________
IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease Agreement, each by their duly
authorized representative(s), as of the date shown at the beginning of this Aircraft Lease Agreement.
LESSOR: LESSEE:
AFS INVESTMENTS XVI LLC FRONTIER AIRLINES, INC.
By: AFS INVESTMENTS XVI INC.
its sole member
By: __________________________ By: __________________________
Name: __________________________ Name: __________________________
Title: __________________________ Title: __________________________
SCHEDULE A
PART I-Airframe and engines description
AIRFRAME
Manufacturer: Airbus
Model: A319-100
Serial Number: 1759
MTOW 154,300 pounds
ENGINES (each of which has 750 or more rated takeoff horsepower or the equivalent of such horsepower)
Engine Type: CFM56-5B5/P
Serial Nos: To be advised at Delivery and included in the Lease Supplement.
The serial numbers stated under "Aircraft" and "Engines" above are those advised to Lessor by the
Manufacturer. If the Manufacturer advises of any change to any serial number, the new number will be deemed
inserted under "Serial Number" under "Aircraft" and "Engines" above, as the case may be, above.
SCHEDULE A
PART II-AIRCRAFT DOCUMENTS
MANUALS AVAILABLE (headlines)
1 - ENGINEERING DOCUMENTS
2 - MAINTENANCE & ASSOCIATED MANUALS
3 - MISCELLANEOUS PUBLICATIONS
4 - OPERATIONAL MANUALS AND DATA
5 - OVERHAUL DATA
6 - STRUCTURAL MANUALS
MANUALS AVAILABLE (detailed) Abbr Form Type Qty. Delivery
1. ENGINEERING DOCUMENTS
Process and Material Specification PMS F E 1 0***
Standards Manual SM F E 1 -90
2. MAINTENANCE & ASSOCIATED MANUALS
APU Build-up Manual ABM P2 E 2 -90
Aircraft Maintenance Manual AMM F C 10 0 to +90
MF C 1 0 to +90
Aircraft Time Limits/Maintenance Checks TLMC P2 C 3 90
Aircraft Schematics Manual ASM F C 10 0 to +90
MF C 1 0 to +90
Aircraft Wiring Manual AWM F C 5 0 to +90
MF C 1 0 to +90
Aircraft Wiring Lists AWL F C 5 0 to +90
MF C 1 0 to +90
Consumable Material List CML P2 E 1 -90
Duct Repair Manual DRM P2 E 1 90***
Fuel Pipe Repair Manual FPRM P2 E 1 90***
Illustrated Parts Catalog (Airframe) IPC F C 10 0 to +90
MF C 1 0 to +90
Illustrated Parts Catalog (Power Plant)**PIPC F C 10 0 to +90
MF C 1 0 to +90
Illustrated Tools and Equipment Manual TEM P2 E 3 -180
Maintenance Facility Planning MFP P2 E 2 -360
Maintenance Planning Document MPD P2 P 1 -180
E 3 -90
Power Plant Build-up Manual** PBM P2 C 2 -90
Support Equipment Summary SES P1 E 2 -180
Tool and Equipment Drawings ▇▇▇ AC E 1 -180
Tool and Equipment Index TEI P2 E 2 360
Tool and Equipment Bulletins TEB P1 E 3 0
Trouble Shooting Manual TSM F C 10 0 to +90
MF C 1 0 to +90
3. MISCELLANEOUS PUBLICATIONS
Airplanes Characteristics for Airport Planning AC P2 E 2 -360***
Aircraft Recovery Manual ARM P2 E 2 0***
Cargo Loading System Manual CLS P2 E 2 -90
Crash Crew Chart CCC P1 E 5 -180
List of Radioactive and Hazardous Elements LRE P2 E 1 90***
List of Applicable Publications LAP P1 C 1 -180
Livestock Transportation Manual LTM P2 E 1 90***
Service Bulletin SB P2 C 2 0
F E 1 -90
Technical Publications Combined Index TPCI D E 1 -90
Service Information Letters SIL P1 E 1 0
Transportability Manual TM P1 E 1 -90***
Vendor Information Manual VIM D E 1 360
Vendor Information Manual GSE VIM/GSE P2 E 2 360
The quantities listed below are in addition to the set of one copy of each operational manual to be delivered
with the Aircraft (except PEP/PPM).
4. OPERATIONAL MANUALS AND DATA
Quick Reference Handbook QRH P2 C 3 -90
Flight Crew Operating Manual FCOM P2 C 3 0
Flight Manual FM P2 C 1 -90
C 3 0
Master Minimum Equipment List MMEL P2 C 3 0
Performance Engineering Program PEP MT C 1 -90
D C 1 -90
Performance Program Manual PPM P2 C 3 90
Weight and Balance Manual WBM P2 C 3 0
5. OVERHAUL DATA
Component Documentation Status CDS D C 1 180***
Component Evolution List CEL P2 E 1 ***
Cable Fabrication Manual CFM P2 E 1 90***
Component Maintenance Manual Airframe
Manufacturer CMMM F E 2 -180 to +180*
6. STRUCTURAL MANUALS
Nondestructive Testing Manual NTM P2 E 2 -90***
Structural Repair Manual SRM F E 2 -90***
** Supplied by the Propulsion Systems manufacturer.
*** Optional. Delivered as follow-on for CDS.
MANUAL FORMAT AND TYPE IDENTIFICATION
FORM AC APERTURE CARD. Refers to 35mm film contained in punched aperture cards.
D FLOPPY DISK 3"1/2
F MICROFILM. Refers to 16mm roll film on 3M type cartridges.
MF MASTER FILM. Refers to thick diazo film suitable for further reproduction.
MP Refers to paper printed one side, unpunched quality shall be suitable for further
reproduction or microfilming.
MT MAGNETIC TAPE
P1 PRINTED ONE SIDE. Refers to manuals in paper with print on one side of the sheets
only.
P2 PRINTED BOTH SIDES. Refers to manuals with print on both sides of the sheets.
TYPE C CUSTOMIZED. Refers to manuals which are customized.
E ENVELOPE. Refers to manuals which are not customized.
P PRELIMINARY. Refers to preliminary data or manuals which may consist of:
o either one time issue not maintained by revision service, or
o preliminary issues maintained by revision service until final manual or data delivery, or
o supply of best available data under final format with progressive completion through
revision service.
DELIVERY Manual delivery is expressed either as the number of days prior to delivery of the Aircraft or
as nil (0), which designates the date of delivery of the Aircraft. It is agreed that the
number of days indicated will be rounded up to the next regular revision release date.
SCHEDULE A
PART III-DELIVERY CONDITION REQUIREMENTS
Set forth below is a description of the condition in which the Aircraft must be in order for Lessee to be
obligated to accept the Aircraft under the Lease. It is solely a description of such condition precedent and
shall not be construed as a representation, warranty or agreement of any kind whatsoever, express or implied,
by Lessor with respect to the Aircraft or its condition, all of which have been disclaimed by Lessor and
waived by Lessee as set forth in the Lease, including in the Common Terms Agreement.
Delivery Condition Requirements:
1. The "Delivery Condition Requirements" for the Aircraft are as follows:
On Delivery, the Aircraft shall
(i) be new, ex factory and painted in Lessee's livery;
(ii) have a valid Export Certificate of Airworthiness for the United States;
(iii) have an issued FAR 121 Compliance Statement from the Manufacturer;
(iv) on or prior to the Delivery Date, have had accomplished all outstanding mandatory service
bulletins, Airworthiness Directives and similar requirements applicable to the Aircraft
having a compliance date prior to the Delivery Date or within 180 days after the Delivery
Date and which are required by the State of Design, the FAA or the Manufacturer.
(v) and otherwise be in the condition required for delivery pursuant to each of two Purchase
Agreements, dated July 16, 1996 and September 29, 1998, respectively, each between the
Manufacturer and GE Capital (each a "Purchase Agreement" and together, the "Purchase
Agreements") and the Airbus Aircraft Specification Number D.000.0200, Issue Number 4, dated
April 30, 1995, except as amended by change orders initiated by Lessor under the terms of
the Purchase Agreement, including as modified to include the additional GECC baseline SCNs
in accordance with the GECC A319 baseline specification Issue 1 (the "GECC A319 Baseline
Specification.")
2. Modifications (a) The Agreed Lessee Modifications shall be accomplished pre-delivery at the sole
cost and expense of Lessee. Lessor shall use reasonable efforts to accomplish all Agreed Lessee
Modifications prior to Delivery. Cost of all Agreed Lessee Modifications, including charges for any
"out of sequence production", shall be invoiced to Lessee upon Lessor's receipt of invoice
applicable to each individual Agreed Lessee Modification from the relevant third party vendor. If
Lessor notifies Lessee that any Agreed Lessee Modification cannot be accomplished prior to the
Delivery Date, including without limitation any delays in accomplishing such Modifications caused by
failure of Lessee to deliver any materials or parts to the Manufacturer by the required on-dock
dates as advised by Manufacturer, such Agreed Lessee Modification shall be excluded from the
Delivery Condition Requirements.
(b) Cost Adjustment. Lessor and Lessee agree that if all fees, costs and expenses invoiced to
Lessor directly attributable to the Agreed Lessee Modifications, including without limitation, the
order, purchase, delivery and installation on the Aircraft of the galleys, seats, avionics, APU and
wheels and brakes (collectively, the "BFE/SFE") selected by Lessee as part of the Agreed Lessee
Modifications are less than such fees, costs and expenses invoiced to Lessor for the BFE/SFE
selected by Lessor as part of the GECC A319 Baseline Specification, then upon the delivery of the
Aircraft, Lessor shall pay to Lessee the difference between (i) the Lessee selected BFE/SFE ,
pro-rata for such Aircraft leased by Lessee from Lessor, and (ii) the Lessor selected BFE/SFE for
such Aircraft. Lessee acknowledges that Lessor is subject to confidentiality agreements with its
vendors relating the price of the above referenced BFE/SFE. Lessor shall certify to Lessee the net
difference between the costs of Lessee selected BFE/SFE if less than the Lessor selected BFE/SFE.
(c ) Specification Credit. Lessee has requested that the items listed below in this clause (c )
(the "Listed Items") be removed from the GECC A319 Baseline Specification and not be included in the
Aircraft. Lessor shall, in its discretion, determine whether each Listed Item is, or is not,
removed from the Aircraft. In consideration thereof, Lessee hereby receives a credit for the
Aircraft in the amount of One Hundred Twenty-five Thousand Dollars ($125,000) (the "Specification
Credit") (i) first, against any amounts due and payable by Lessee to Lessor relating to the cost of
any additions to the GECC A319 Baseline Specification selected by Lessee; (ii) second, to the extent
any Specification Credit remains, against any amounts due and payable by Lessee to Lessor relating
to the cost of any increase in BFE or SFE not already included in the GECC A319 Baseline
Specification and (iii) third, to the extent any Specification Credit remains, against any amounts
due and payable by Lessee to Lessor under this Agreement. No Listed Items shall be included in the
cost adjustments provided in clause 2 (b) above.
Listed Items:
Ozone Catalytic Converters (G8EO2J1011101S1H)
HF LRU (G8E23J1113004S1H)
Third Radio Management Panel (G8E23J1310102S1H)
System Prov. For Audio Pax Entertainment Sys. (G8E23J3670000G1H)
System Provisions for PES Video (G8E23J3670000G1H,
G8E23J3610501S1H)
Lav. D Mod. for Stretcher Loading (G8E25J2070000G1H)
Prov. For Mech. Bulk Loading (G8E25J5231501S1H,
System in Fwd. And Aft Cargo Holds MCG8E25.52.003J1MO1)
SCHEDULE B
COMMERCIAL TERMS
Lessor and Lessee hereby agree that the definitions and other commercial and financial terms set
forth in this Schedule B shall apply to the leasing of the Aircraft under the Lease.
In addition, Lessor and Lessee understand and agree that the commercial and financial information
contained in this Schedule B are considered by Lessor and Lessee as proprietary and confidential. Lessor and
Lessee each hereby agree, and any of their assignees, upon becoming such shall agree that it will treat this
Schedule B as proprietary and confidential and will not, without the prior written consent of the other,
disclose or cause to be disclosed, the terms hereof or thereof to any Person, except to its agents,
representatives, advisors, employees, counsel, underwriters, auditors, investors, financing parties and head
lessors as necessary or appropriate for the leasing transaction which is the subject hereof, or except (a) as
may be required by applicable Law or pursuant to an order, or a valid and binding request, issued by any
court or other Government Entity having jurisdiction over Lessor, Lessee or the assignee of either of them,
as the case may be, or (b) as necessary to enable Lessor or its assignee to make transfers, assignments or
other dispositions to potential transferees, assignees or participants of its interest in and to the Lease.
In connection with any such disclosure or any filing of the information contained herein or therein
pursuant to any such applicable Law, Lessor, Lessee or the assignee of either of them, as the case may be,
shall request and use its best reasonable efforts to obtain confidential treatment of this Schedule B and the
other party will cooperate in making and supporting any such request for confidential treatment.
PART I PART I-CASUALTY OCCURRENCE DEFINITIONS
Agreed Value means $33,500,000.
Damage Notification Threshold means $500,000.
Deductible Amount means $750,000; provided that the Deductible Amount shall not be higher than the
lowest deductible carried on any hull insurance policy maintained in respect of any Airbus A319
series 100 aircraft in Lessee's fleet which is leased, purchased, financed or refinanced after June
8, 2000.
Minimum Liability Coverage means $600,000,000.
PART II DEPOSIT; LC AMOUNT; INTEREST RATE
Deposit means, for the purposes of Section 3.1 of the Aircraft Lease Agreement, $411,800, one-half
of which shall have been paid on or before the date hereof; and the balance of which shall be paid
no later than 30 days prior to Delivery of the Aircraft; provided, however, that Lessee may elect to
provide Lessor with a Letter of Credit in an amount, from a financial institution and otherwise in
form and substance, reasonably acceptable to Lessor. Lessee acknowledges and agrees that it is not
located in the State of New York within the meaning of Section 7-101 1-c(b) of the New York General
Obligations Law, and therefore the requirements of Section 7-101 of the New York General Obligations
Law do not apply to the Deposit.
Initial Aircraft Rental Credit means, an amount equal to $1,000,000.
Interest Rate: The Interest Rate shall be the "prime rate" as quoted in the Wall Street Journal
from time to time during the applicable period plus one and one-half percent (1.5%) per annum, but
not to exceed the maximum amount permitted by Law.
LC Amount means, for the purposes of Section 3.1 of the Aircraft Lease Agreement, the amount of the
Deposit secured by a Letter of Credit.
Pre-Delivery Termination Value means $2,500,000.00.
Quotation Date means the day two Business Days before the Scheduled Delivery Date.
PART III RENT
Assumed Rent means (i) for the first twelve (12) Rental Periods $205,900; (ii) for Rental Periods 13
through 24 $215,900; and (iii) for each Rental Period thereafter, $225,900. The foregoing amounts
are based upon the Manufacturer's Aircraft Price in June, 1999 and an eight year swap rate between
6.05% and 6.83%. The Assumed Rent shall be (A) increased by an amount equal to $3,230 per month if
Lessee elects to pay the Deposit pursuant to a Letter of Credit and (B) increased by (i) $8,000 per
month if Lessee elects, upon no less than 14 months prior written notice, to reschedule Delivery of
the Aircraft to any Alternate Scheduled Delivery Month in lieu of the current Scheduled Delivery
Month as herein defined or (ii) $16,000 per month if Lessee elects, upon no less than 14 months
prior written notice, to reschedule Delivery of the Aircraft to a month which is not a Scheduled
Delivery Month or an Alternate Scheduled Delivery Month.
Rent. The Rent payable in respect of each Rental Period during the Term shall be payable in 144
consecutive monthly installments, in advance on each Rent Date, with each such installment equal to
an amount calculated as follows:
Rent = (A x B + ([S-X] x [N x B])) where:
A is the Assumed Rent for the applicable Rental Period;
X means the assumed 8-year U.S. Dollar Swap rate expressed as a number determined as follows:
(i) ifs is less than or equal to 6.05%, then X is equal to 6.05%, (ii) ifs is greater than
6.05% and less than 6.83%, then X is equal to S, and (iii) ifs is equal to or greater than
6.83%, then X is equal to 6.83%;
S is (i) the actual 8 year Dollar swap rate ("Open" rate per Bloomberg screen "IRSB" )
expressed as a number and obtained by Lessor on the Quotation Date: or, if on the Quotation
Date the Bloomberg Screen "IRSB" is not available or does not display rates for the
required period, the 8-year Dollar swap rate quoted on the applicable Reuters page,
expressed as a number and obtained by Lessor on the Quotation Date; or (ii) the sum of(a)
the actual 8 year Dollar swap rate as set forth in (i) above fixed on a date, at Lessee's
option, which is earlier than title Quotation Date upon 30 days' prior written notice to
Lessor; and (b) 15 basis points for each year from the effective date of such notice (which
effective date shall be 30 days after the date of such notice) until the Scheduled Delivery
Date, pro rated for any partial year;
N is $12,900; and
B is 1 + (Gl - G2)/G2, rounded to the nearest five (5) places of decimals, where:
Gl is the Manufacturer's Gross Invoice Price for the Aircraft on the basis of
delivery of the Aircraft on the Delivery Date; provided, however, that G1 shall
not be disclosed by Lessor to Lessee and
G2 is the Manufacturer's Gross Invoice Price for the Aircraft which would apply if
the Aircraft were delivered in June 1999; provided, however, that G2 shall not be
disclosed by Lessor to Lessee.
PART IV [INTENTIONALLY OMITTED]
PART V SUPPLEMENTAL RENT
The Supplemental Rent payable will be determined with reference to the following:
Airframe Supplemental Rent means all (i) Airframe 4C Supplemental Rent and (ii) Airframe 8C
Supplemental Rent in each case payable by Lessee pursuant to Clause (a) below.
Annual Supplemental Rent Adjustment means (3%.)
APU Supplemental Rent means all Supplemental Rent payable by Lessee pursuant to Clause (d) below.
Assumed Ratio Adjustment: For the purposes of Section 5.4 of the Common Terms Agreement, Assumed
Ratio means a 2.5 hour to one cycle ratio (2.5:1) and any adjustment pursuant to Clause 5.4 shall be
based on the following table:
Airbus A319 Aircraft - 0.5/1 1.0/1 1.5/1 2.0/1 2.5/1 3.0/1
FH/CYC Ratio
Airframe 4C $32 $32 $32 $32 $32 $32
Supplemental Rent Rate
Airframe 8C $12 $12 $12 $12 $12 $12
Supplemental Rent Rate
Engine Refurbishment $128 $88 $73 $65 $62 $59
Supplemental Rent Rate
Engine LLP Supplemental $115 $52.5 $35 $26 $21 $17.5
Rent Rate
APU Supplemental Rent $39 $20 $13 $9 $7 $9
Rate
Landing Gear $39 $20 $13 $9 $7 $6
Supplemental Rent Rate
Assumed Utilization means an annual utilization of 3,500 hours per annum.
Engine Supplemental Rent means all (i) Engine LLP Supplemental Rent payable by Lessee pursuant to
Clause (b) below, and (ii) Engine Refurbishment Supplemental Rent payable by Lessee pursuant to
Clause (c) below.
Landing Gear Supplemental Rent means all Supplemental Rent payable by Lessee pursuant to Clause (e)
below.
Supplemental Rent equals each of the following amounts:
(a) Airframe: in respect of each Airframe 4C Check, $32 ("Airframe 4C Supplemental Rent Rate") for each
Flight Hour operated by the Aircraft during each calendar month during the Term ("Airframe
4C Supplemental Rent") and Airframe 8C Check, $12 ("Airframe 8C Supplemental Rent Rate")
for each Flight Hour operated by the Aircraft during each calendar month during the Term
("▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇");
(b) Engine Life-Limited Parts: in respect of the life-limited Parts for each Engine installed on the
Airframe, $21 ("Engine LLP Supplemental Rent Rate") for each Flight Hour operated by that
Engine during each calendar month during the Term ("Engine LLP Supplemental Rent");
(c) Engine Refurbishment: in respect of each Engine installed on the Airframe, $62 ("Engine
Refurbishment Supplemental Rent Rate") for each Engine Flight Hour (or fraction thereof)
operated by that Engine during each calendar month during the Term ("Engine Refurbishment
Supplemental Rent");
(d) APU: in respect of the APU Airframe, $7 ("APU Supplemental Rent Rate") for each Flight Hour
operated by the APU during each calendar month during the Term ("APU Supplemental Rent"); and
(d) Landing Gear: in respect of the Landing Gear, $7 ("Landing Gear Supplemental Rent Rate") for each
Flight Hour operated by the Landing Gear during each calendar month during the Term
("Landing Gear Supplemental Rent").
Supplemental Rental Cap means an aggregate amount of all Supplemental Rent paid in respect of the
Aircraft during the Term in an amount equal to the sum of (i) $2,500,000 plus (ii) the amount of all
Maintenance Contributions made by Lessor in respect of the Aircraft.
PART VI RETURN CONDITION DEFINITIONS; MAINTENANCE PAYMENTS AT REDELIVERY; AIRWORTHINESS DIRECTIVE SHARING
PAYMENTS
DEFINITIONS:
Engine Cycles Restriction means 3,500 Engine Cycles.
Engine Flight Hours Restriction means 4,000 Engine Flight Hours.
Engine Refurbishment means all scheduled and unscheduled off-the-wing Engine maintenance and repair
accomplished for each module in accordance with the performance restoration, minimum restoration or
full overhaul sections of the Manufacturer's workscope planning guide and including performing the
following for each of the modules, for each of the Engines:
Hot Section Module means the combustor, combustor casing, HPT nozzle, HPT rotor, LPT nozzle
(stage one).
Hot Section Module Refurbishment means, with respect to any Engine, the accomplishment of a
"Performance Level" refurbishment, per the CFMI Workscope Planning Guide, of the Hot Section
Module including the complete inspection and repair as necessary per the shop manual of the
combustor, combustor casing, high pressure turbine nozzle section, high pressure turbine
rotor, and low pressure turbine nozzle stage 1 in an engine repair/overhaul station,
including (without limitation) complete unstacking of the high pressure turbine; de-blading
of discs; visual inspections of all discs; verification that all snap diameters on discs are
within limits; inspection of all blades for tip condition, blade length and cracking.
Repair or replacement of all blades below minimum with new or refurbished blades; blade-up
of discs using new lock plates; assembly of rotors in the turbine; balance of all rotors;
installation of rotor in the Engine.
HPC Module means the high pressure compressor rotor and the high pressure compressor forward
and aft stator .
HPC Module Refurbishment means, with respect to any Engine, the accomplishment of a
"Performance Level" refurbishment, per the CFMI Workscope Planning Guide, of the HPC Module
including the completion of the following: complete unstacking of the high pressure
compressor and complete shop manual inspection; of the forward and aft stator cases,
de-blading discs; visual inspections of all discs; verification that all snap diameters on
discs are within limits; inspection of all blades for proper chord dimensions, cracking; and
erosion on leading and trailing edges; repair or replacement of blades below minimum;
inspection and repair of stators as necessary; blade-up of discs using new lock plates;
assembly of rotor in the compressor; balance of all rotors; and installation of rotor in the
Engine..
Fan and Booster Module means the fan rotor and booster, the number 1 and 2 bearing support,
inlet gearbox and number 3 bearing assembly, and the fan frame assembly.
Fan and Booster Module Refurbishment means, with respect to any Engine, the accomplishment
of a "Minimum Level" refurbishment, per the CFMI Workscope Planning Guide, of the fan and
booster module including the completion of the following: removal from engine and shop
manual inspection of fan/booster assembly, removal and shop manual inspection of fan blades,
booster blades, and spacers. The fan disk should be separated from the booster spool only
for cause. Visually inspect the exposed areas of the fan disk and booster spool. Recontour
fan blades, inspection of all blades for proper chord dimensions and cracking; repair or
replacement of blades below minimum; inspection and repair of stators as necessary; blade-up
of discs using new lock plates; assembly of rotors in the compressor; balance of all rotors;
installation of rotor in the Engine..
LPT Module means the low pressure turbine, LPT shaft, and LPT Frame.
LPT Module Refurbishment means, with respect to any Engine, the accomplishment of a "Minimum
Level" refurbishment, per the CFMI Workscope Planning Guide, of the LPT Module including the
complete visual inspection and repair as necessary of the low pressure turbine module of an
Engine in an engine repair/overhaul station, including (without limitation) complete
unstacking of the low pressure turbine; complete visual inspection; de-blading of discs ;
visual inspections of all discs; verification that all snap diameters on discs are within
limits; inspection of all blades for proper chord dimensions and cracking; repair or
replacement of all blades below minimum; inspection and repair of stators as necessary;
blade-up of discs using new lock plates; assembly of rotors in the turbine; balance of all
rotors; and installation of rotor in the Engine.
Accessory Drive Module means the Transfer Gearbox and Accessory Gearbox.
Accessory Drive Module Refurbishment means with respect to any engine the inspection and
repair per shop manual.
Minimum APU Limit means 1,500 Flight Hours since the last gas path refurbishment.
Minimum Component Calendar Life means 12 months.
Minimum Component Cycles means 1,600 Cycles
Minimum Component Flight Hours means 3,200 Flight Hours
Minimum Engine Cycles means 3,500 Cycles.
Minimum Engine Flight Hours means 4,000 Flight Hours.
Minimum Landing Gear Calendar Time means 18 months
Minimum Landing Gear Cycles means 3,500 Cycles.
Minimum Landing Gear Flight Hours means 4,000 Flight Hours.
Minimum Measurable Fuel Requirement means the amount of fuel as at Delivery.
Redelivery "C" Check means the next sequential Block `C' check in accordance with the Lessee's
Maintenance Program including those bridging tasks identified in the Manufacturer's Maintenance
Planning Document, Appendix J, to bridge the Aircraft back to a block program and "Block `C'
Structural Check" with at least 4,000 Flight Hours remaining to the next "C" or higher check.
AD Sharing
AD Threshold means $100,000.
If any Airworthiness Directive is issued by the FAA for which terminating action is required to be
performed by Lessee pursuant to Section 8.10(c)(ii) of the Common Terms Agreement and FAR Part 121
and if the actual cost incurred by Lessee (as documented in the same manner and paid within the same
time as required under Section 7.2 of the Common Terms Agreement for a Maintenance Contribution
payment by Lessor) in performing or causing to be performed such Airworthiness Directive exceeds the
AD Threshold, Lessor shall, following receipt of the invoice in such amount and provided no (i)
Default relating to any payment under the Lease or (ii) any other Event of Default has occurred and
is continuing, reimburse to Lessee an amount calculated in accordance with the following formula:
A-B* (C-D)/C where:
A = Total actual invoiced cost of such Airworthiness Directive.
B = AD Threshold.
C = 96 months.
D = Months remaining to the Scheduled Expiry Date.
MAINTENANCE ADJUSTMENTS:
Maintenance Adjustment: In respect of each calendar month (or part thereof) during the Term, Lessee will pay
to Lessor at the end of the Term in accordance with Section 5.4 of the Common Terms Agreement and Section 3.3
of this Agreement the following Maintenance Adjustments:
(a) Airframe Maintenance Adjustment: in respect of the Airframe 4C Check and Airframe 8C Check, upon
redelivery of the Aircraft to Lessor (but not after the occurrence of an Event of Loss with respect to
the Aircraft), Lessee shall pay to Lessor for each Flight Hour since new or since the last Airframe
Structural Check, as applicable, an amount equal to (i)(A) the number of Flight Hours on the Airframe
since new or since the last Airframe Structural Check, as applicable, multiplied by (B) the Airframe 4C
Supplemental Rent Rate less (C) the Remaining Airframe 4C Supplemental Rent and an amount equal to
(ii)(A) the number of Flight Hours on the Airframe since new or since the last Airframe Structural
Check, as applicable, multiplied by (B) the Airframe 8C Supplemental Rent Rate less (C) the Remaining
Airframe 8C Supplemental Rent (collectively, the "Airframe Maintenance Adjustment").
(b) Engine Refurbishment Maintenance Adjustment: in respect of each Engine, upon redelivery of the Aircraft
to Lessor (but not after the occurrence of an Event of Loss with respect to the Aircraft or any Engine),
for any life used since new or since the latest Engine Refurbishment of each defined module (as further
described below, each a "Defined Module") in accordance with the applicable percentage, whichever is
less, to the date of Redelivery, Lessee shall pay to Lessor an amount equal to (i) for each Engine
Flight Hour (or fraction thereof) operated by that Engine in the aggregate during each calendar month
during the Term since new or since the last Engine Refurbishment multiplied by (ii) the Engine
Refurbishment Supplemental Rent Rate less (iii) Remaining Engine Refurbishment Supplemental Rent (the
"Engine Refurbishment Maintenance Adjustment"). For purposes of this Clause, Defined Modules shall
include each of the Combustion Chamber/ High Pressure Turbine (38% of the Engine Refurbishment
Supplemental Rent Rate); High Pressure Compressor (33% of the Engine Refurbishment Supplemental Rent
Rate); the Low Pressure Turbine (16% of the Engine Refurbishment Supplemental Rent Rate) and the Fan
Booster (13% of Engine Refurbishment Supplemental Rent Rate).
provided, however, if any of the amounts described above is less than zero then the applicable Maintenance
Adjustment shall be equal to zero.
(c) Engine Life Limited Parts: with respect to Engine Life-Limited Parts ("Engine LLPs"), upon redelivery
of the Aircraft to Lessor (but not after the occurrence of an Event of Loss with respect to the Aircraft
or any Engine), within any Engine, Lessee shall pay to Lessor an amount equal to (i) for each Engine
Flight Hour (or fraction thereof) operated by that Engine in the aggregate during each calendar month
during the Term since new or since the last Engine Refurbishment multiplied by (ii) the Engine LLP
Supplemental Rent Rate less (iii) Remaining Engine LLP Supplemental Rent (the "Engine LLP Maintenance
Adjustment").
(d) APU: with respect to the APU, upon redelivery of the Aircraft to Lessor (but not after the occurrence of
an Event of Loss with respect to the Aircraft), Lessee shall pay to Lessor an amount equal to (i) $7 per
Flight Hour since new or HSI in accordance with the Manufacturer's recommendations less (ii) the
Remaining APU Supplemental Rent (the "APU Maintenance Adjustment").
(e) Landing Gear Adjustment: with respect to Landing Gear (per shipset), upon redelivery of the Aircraft to
Lessor (but not after the occurrence of an Event of Loss with respect to the Aircraft), Lessee shall pay
to Lessor an amount equal to (i) $7 per Flight Hour since new or since complete overhaul in accordance
with the Manufacturer's recommendations, whichever is less, minus (ii) the Remaining Landing Gear
Supplemental Rent (the "Landing Gear Maintenance Adjustment")
For purposes of this section: "Remaining Airframe Supplemental Rent" means the amount equal to the aggregate
amount of Airframe 4C Supplemental Rent and the Airframe 8C Supplemental Rent paid under the Lease during the
Term minus the aggregate amount previously paid by Lessor under Section 7.2(a)(i) of the Common Terms
Agreement. "Remaining Engine LLP Supplemental Rent" means the amount equal to the aggregate amount of Engine
LLP Supplemental Rent paid under the Lease during the Term minus the aggregate amount previously paid by
Lessor under Section 7.2(a)(ii) of the Common Terms Agreement. "Remaining Engine Supplemental Rent" means the
amount equal to the aggregate amount of Engine Supplemental Rent paid under the Lease during the Term minus
the aggregate amount previously paid by Lessor under Section 7.2(a)(iii) of the Common Terms Agreement.
"Remaining APU Supplemental Rent" means the amount equal to the aggregate amount of APU Supplemental Rent paid
under the Lease during the Term minus the aggregate amount previously paid by Lessor under Section 7.2(a)(iv)
of the Common Terms Agreement. "Remaining Landing Gear Supplemental Rent" means the amount equal to the
aggregate amount of Landing Gear Supplemental Rent paid under the Lease during the Term minus the aggregate
amount previously paid by Lessor under Section 7.2(a)(v) of the Common Terms Agreement.
SCHEDULE B
INTENTIONALLY DELETED FROM THE VERSION OF THIS DOCUMENT FILED WITH THE FAA AS CONTAINING CONFIDENTIAL AND
PROPRIETARY INFORMATION.